The account balances for Great Gadget, Inc. for the year ended December 31, 2013, are presented next in random order:
Cash ............. $ 9,300
Equipment ......... 39,800
Accounts Payable ...... 6,300
Common Shares ..... 25,000
Long-Term Notes Payable .... 35,000
General Expenses ....... 18,200
Wages Payable ........ 1,300
Supplies ........ 3,300
Building ........ 130,000
Sales Returns and
Allowances ........ 2,900
Prepaid Rent ........ 2,600
Retained Earnings ....... 25,700
Inventory ........ 3,700
Cost of Goods Sold ..... $135,000
Accumulated Depreciation,
Equipment ........ 13,700
Unearned Revenues ...... 1,900
Sales Revenue ........ 257,000
Accounts Receivable ..... 4,500
Accumulated Depreciation,
Building ........ 25,900
Mortgage Payable
(Long-Term) ........ 43,500
Dividends ........ 41,000
Sales Discounts ........ 1,500
Selling Expenses ....... 43,500
Requirements
1. Prepare Great Gadget’s single-step income statement.
2. Would you recommend the use of the single-step income statement format by a merchandiser? Why?